Note: The following post was written by Ira S. Rosenbloom, CPA, chief operating executive at Optimum Strategies,  a consulting firm focused on helping small and medium-sized CPA firms enhance business performance, profitability, and foster practice continuity.

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If you are like most CPAs in public practice, your clients frequently ask you about the value of their businesses and the steps they can take to maximize that value. Now more than ever, as the owner of a CPA firm, you should be asking yourself these same questions, since they relate to your practice. The healthier your bottom line, the greater your options − including the opportunity for your firm to garner increased outside interest.

Whether this will be your last tax season or one of many more to come, you should always run your practice as though you are positioning it for sale. Not only will you be prepared to earn the maximum return on your practice when you decide to sell or combine, you will also reap the rewards of running your firm in a way that optimizes the professional and financial satisfaction for you, your partners, and your employees.

These three factors can help you see the win–win in bolstering your bottom line:

• Undue risk is a detriment. The more predictable your cash flow, the more you can control your risk, ensure upward performance, and make sound investment decisions. Two areas of common potential vulnerability are your fee structure and your client demographics. Engineering your practice to minimize these risks as you operate the firm — as well as for potential future owners — is a must. Any savvy prospective buyer will assess your firm’s risk areas prior to making an offer and compare the risk that you bring to the risk that another practice has. Limit the risk as you maximize the upside now and in the future.
   
• Strong ROI is a universal magnet. Most successful firms aim to maximize their productive time. The better your realized hourly rate, the more revenue you will have to improve your lifestyle — and that of your associates. This works to attract quality talent and build revenue sources for even better ROI. The better the ROI of your practice, the more appealing your firm will be to another practice or a suitor, and the greater the potential rewards.
   
• Tactical strength generates rewards. Clients are attracted to expertise, and so are employees and potential suitors. Expertise and talent should not be restricted to the technical area, but should also include marketing and administrative know-how. Niches, industry visibility, and efficiencies are strengths that will come from the right talent, and will often generate the appealing results of higher quality clients, better time management, and an improved bottom line. Having the right kind of talent and the right clients is integral to your firm’s success and will pay off for you as the owner and the potential seller.

Optimizing the performance of your practice will produce near-term and long-term benefits. Given the responsibility, challenges, and effort associated with owning a CPA firm, a maximum return on your investment is the only result you should accept.

Want to learn more?
Don’t miss Ira Rosenbloom’s Jan. 21 program “CPA Firm M&A Workshop: Comprehensive Options for a Sale, Merger, or Independence.” Rosenbloom will focus on the ground rules to enhancing your firm’s ROI and multiplying your succession planning options. The four-hour program will be held from 8 to 11:30 a.m. at the MACPA’s Towson Center. Get complete details and register here.